Askari Bank reports 45% increase in profit after tax in 2022

Askari Bank reported a profit after tax (PAT) of Rs14.07 billion in 2022, an increase of 45% as compared to Rs9.715 billion recorded in 2021.

As per the bank’s financial results for the year ended December 31, 2022, the 45% growth was lower than expected on account of higher and excessive taxation on banking companies introduced in the Finance Bill, which also included retrospective application.

The bank’s foreign exchange income increased by 72% to Rs5.5 billion in 2022 as compared to Rs3.2 billion in 2021. The jump “is attributable to increase in volume of large ticket transactions and active participation in interbank swap market,” it said.

Askari reported earnings per share of Rs11.16 for 2022 compared to Rs7.70 last year.

The bank’s profit before tax came in at Rs27.5 billion for 2022, an increase of 76% over last year.

“The record profit was delivered by strong performance on all key activity drivers amidst challenging market fundamentals,” said the bank.

Meanwhile, revenues increased by 23% YoY, to Rs51.6 billion from Rs.41.8 billion last year. Net mark-up income increased to Rs40 billion from Rs32.4 billion, a 23% YoY increase.

Fee, commission and brokerage income increased by 18% as the Bank recorded volumetric growth in trade flows while card revenues increased due to higher consumption levels.

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Administrative expenses increased by 8% during the year mainly due to the impact of new branches, inflationary upsurge and Rupee devaluation. Meanwhile, the bank’s compensation expense decreased by 2% during the year, mainly due to implementation of human capital strategy.

Overall cost to income ratio improved to 44.7% in 2022 from 50.7% last year.

Askari’s total assets grew by 21.2% to Rs1.53 trillion. Customer deposits increased by Rs.127 billion during the year and closed at Rs.1.14 trillion, reflecting a 12.5% growth.

Advances grew by 21% YoY to Rs.615 billion as the bank capitalized on lending opportunities while maintaining credit discipline and rigorous client selection. “At the year end, gross advances to deposits ratio stood at 54% comfortably higher than the threshold of 50%,” it said.

The bank also said elevated market rates driven by inflation, economic stresses and eroding values of GoP Euro bonds sharply increased mark-to-market revaluation deficit on investments.

“Such deficit, coupled with higher taxation and balance sheet growth, had an adverse impact on Bank’s capital ratios,” Askari said.

The bank reported a Capital Adequacy Ratio (CAR) at 15.95% against the regulatory requirement of 11.5% (including capital conservation buffer of 1.50% of the total Risk Weighted Assets (RWA). Leverage ratio is reported at 3.18% including the impact of regulatory relaxation.